RANE: Geopolitical Digest 5/13/2022



MAY 13, 2022

The Week Ahead:

Finland and Sweden Announce their Decisions on NATO. After weeks of statements in favor of NATO accession, the governments of Finland and Sweden will unveil their official positions on the issue on 15 May, with votes in both countries' parliaments to take place in the following days. While most NATO member states, including the United States, France, the United Kingdom and Germany, have expressed support for Finnish and Swedish membership in the military alliance, Turkey has suggested it may veto their bids (which require unanimous support from all member states for approval). Russia would perceive Sweden's and Finland's efforts at NATO membership as another eastward move by the alliance that would further encircle it in the Baltic region. While Moscow will probably respond with disruptive measures, a direct conflict between Russia and Sweden or Finland is improbable.

The US President Visits South Korea Amid North Korean Nuclear Concerns. On 20 May, US President Joe Biden will arrive in Seoul, South Korea, to meet with the newly elected South Korean President Yoon Seok Yeol before leaving for Tokyo on 23 May. During his trip to South Korea, Biden is expected to visit the demilitarized zone and discuss ways to strengthen the partnership between the United States and South Korea to reaffirm a free and open Indo-Pacific. South Korean and American authorities have said they expect a North Korean nuclear test, likely at the Punggye-ri site. This would be the first nuclear test since 2017 and the first since North Korea voluntarily decommissioned Punggye-ri in 2018, and would come as the virus that causes COVID-19 races through the North Korean population. 

Somalia's Presidential Election Finally Happens. On 16 May, Somalia is scheduled to hold presidential elections 15 months after they were originally scheduled to occur. The delay is mainly due to political infighting and security concerns, although those challenges remain in place and are likely to complicate the vote. A record 39 candidates have entered the race. To win the presidency, a candidate must receive 75 percent of the vote, meaning the final results will likely be determined by second- or third-round elections, which require 75 percent support or a simple majority, respectively. While a successful presidential election is a prerequisite for renewing financial support from the International Monetary Fund, a new president is unlikely immediately to be able to improve Somalia's numerous political, economic and security problems.

Please read on for our coverage of the week that was...

 • Key Developments - Analysis • Other Stories We're Tracking - Curated Content
G-7 Agrees to Phase Out Russian Oil, US Announces New Sanctions

What Happened: The leaders of G-7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) issued a joint statement saying they agreed to ban or phase out Russian oil imports in a ''timely and orderly fashion'' and ''in ways that provide time for the world to secure alternative supplies,'' after holding a virtual meeting with Ukrainian President Volodymyr Zelenskyy, Reuters reported on 8 May. In response to Russia's ongoing war against Ukraine, the United States also announced it had agreed with its G-7 allies to impose additional sanctions against Moscow. The latest US measures include new sanctions on Russian entities and individuals, along with a ban on U.S. persons from providing accounting and management consulting services to any person in Russia and additional export restrictions to Russia on a broad range of inputs and products including wood and industrial engines.

Why It Matters: Prior to the 8 May announcement, Japan was the only G-7 member that had not yet agreed to start phasing out Russian oil imports, with Canada, the European Union, the United Kingdom and the United States all previously announcing an embargo or plans for such an embargo. Japan is not a major destination for Russian oil, with Russian crude accounting for just 4 percent of the country's oil imports in the 2021-22 fiscal year. But Japan's inclusion will nonetheless hinder Russia's longer-term economic growth prospects, while the new US sanctions will hit Russia's mid-term military production capabilities. Such a coordinated effort to target Russia, however, means entities in all seven countries will face a greater risk of being placed on a new Russian sanctions list that would ban the export of raw materials and products to them. U.S. officials also emphasized that the new measures, like those already imposed on Russia, would only be rolled back in consultation with Ukraine and as part of an overall peace package, which remains unlikely.

Source: RANE Worldview
Russia Sanctions 31 Energy Companies, Threatening Natural Gas Supply Disruptions

What Happened: Russia imposed sanctions blocking all interaction with 31 energy companies, including many of Russian state gas giant Gazprom's own former subsidiaries (such as its former German unit), as well as other companies that help Europe secure necessary natural gas supplies to meet consumption, Reuters reported on 11 May. Among the sanctioned companies is the owner of the Polish part of the Yamal pipeline that was, until recently, a major export route for Russian natural gas to Europe.

Why It Matters: The sanctions will help maintain upward pressure on European natural gas prices by threatening the continent with further supply disruptions, as more companies could eventually be added to the sanctions. For example, if Russia sanctions German pipeline companies or other national gas utility companies, Russia’s ability to export gas to many European countries would essentially end. Additionally, sanctions on the key Polish section of the Yamal pipeline could limit Europe’s ability to import Russian natural gas if Ukrainian pipes go down, as deliveries are concentrated to a handful of entry points with Russia despite Ukraine's vast amounts of unused pipeline transit capacity. Russia could systematically disrupt these entry points to force Ukraine to shut them off, as in the case of the Sokhranivka point on 11 May. But with time, Europe will be able to secure alternative sources of natural gas and prepare emergency procedures that will reduce the coercive effect of a potential gas shut-off.

Source: RANE Worldview

Essential Geopolitics: Defining India's Neutrality in the Russia-Ukraine War
In this episode of RANE's Essential Geopolitics podcast, South Asia analyst Ekta Raghuwanshi discusses why and how India is maintaining a neutral stance as the West and Russia draw lines over the war in Ukraine. Please click on the RANE Worldview link below to access the podcast.
Source: RANE Worldview

Essential Geopolitics: Costa Rica Declares National Emergency After a Ransomware Attack
In this episode of RANE's Essential Geopolitics podcast, senior analyst Ryan Bohl speaks with RANE director of analysis Sam Lichtenstein about Costa Rica’s president declaring a national emergency after a ransomware attack. They discuss what exactly has been going on, what it could mean for other government agencies, and what risks organizations should be considering. Please click on the RANE Worldview link below to access the podcast.
Source: RANE Worldview
Biden and Xi Struggle to Compete in Asia
As the United States and China step up their global contest for influence and power, each is readying new plans to address their respective strategic blind spots. All too aware that the United States’ economic clout in the region is declining as China’s market continues to grow, Biden will use the ASEAN summit to talk up his forthcoming Indo-Pacific Economic Framework (IPEF). IPEF tries to make up for Washington’s new unwillingness to negotiate the kind of market-opening trade deals Asian leaders like—and which China remains happy to strike. Meanwhile, Beijing is touting a new scheme of its own, similarly designed to patch a hole in its global strategy. China has been unable to push back effectively against the United States’ global network of alliances and its role as a security guarantor.
Source: Foreign Policy

Wary of Policy Shift, China Reaches Out to South Korea’s New President
Yoon Suk-yeol was inaugurated as president of the Republic of Korea. There were a number of foreign guests in attendance, with one of the highest profile being China’s vice president, Wang Qishan. Wang is the highest-ranking Chinese official to attend any South Korean presidential inauguration, a sign of Beijing’s eagerness to persuade Yoon not to follow through on campaign promises to take a harder line on relations with China. Wang has little formal power as China’s vice president, but he is influential due to his close relationship with China’s leader, Xi Jinping. Wang floated the idea of “deepening practical cooperation in industrial supply chains.”
Source: The Diplomat
Marcos as Philippine President a Boon for China, Awkward for US
The victory of Ferdinand Marcos Jr. in the Philippines' presidential election is set to re-shape the Southeast Asian country's relations with China and the United States as he seeks closer ties with Beijing. Marcos is seeking a new deal with Chinese ruler Xi Jinping over the contested waters of the South China Sea. Marcos's relations with the United States, on the other hand, are complicated by a contempt of court order for his refusal to co-operate with the District Court of Hawaii. Marcos is keen to attract investment from China for his ambitious infrastructure agenda. Marcos would seek to preserve the US alliance but keep his options open.
Source: Reuters
Sri Lankan Economic Crisis Creates Opening for India
When a Chinese firm won a contract to build hybrid power plants on three Sri Lankan islands just 30 miles off India’s southeastern coast, New Delhi objected. Now, Sri Lanka has instead granted the project’s development rights to India. The reversal is an example of how Sri Lanka’s economic crisis has opened the door for India to push back against China’s growing influence in the Indian Ocean region. India has stepped in as a balance-of-payments deficit has drained Sri Lanka’s foreign-currency reserves and left it struggling to afford essential imports.
Source: The Wall Street Journal
No Victory for Putin
Putin’s Victory Day speech was remarkable for what it did not say. There was no claim of victory over Ukraine; no liberation of Ukraine from imaginary Nazi rule; no general mobilization for war; no recognition of new Eastern Ukrainian People’s Republics; no launch of a Novorossiya; and no annexation of new lands to the Russian Federation. Instead, Putin sought mainly to justify his invasion of Ukraine as a “necessary” defense against an imagined NATO threat to Russia. Where Putin takes the war after 9 May is still not clear. In the best-case scenario, his tempered rhetoric may indicate a realization that he may need to draw the war to a close – or at least ratchet down to a low-intensity conflict.
Source: Center for European Policy Analysis (CEPA)